Bitcoin at $5000: What Has Changed Since 2017
Bitcoin has crossed the $5000 price range again (after its first reach in 2017) following a sudden breakout on April 2. Its unfolding price scenario would not be immediately considered or ruled out as a repeat of 2017. However, as the market reaction seems to be positive so far (at $5,214 at this writing), recent developments in the crypto space could be working to make today’s change different from what was seen in 2017.
From active Bitcoin wallets to those joining the crypto community like r/Bitcoin subreddit, the number of new people in the space has risen. In 2017, the price breakout over $5000 was one of the reasons many new investors joined the Bitcoin train. Whether seeing it at $5,000 again for the first time after a year of slowdown would trigger the same 2017 effect is indeterminate. For more than a year of bear market, price support for Bitcoin has been built at over $3,000.
Bitcoin first hit $5,000 USD on Oct 12, 2017
Now that Bitcoin is back at $5,000, what has changed? pic.twitter.com/hbOB7askSi
— Kevin Rooke (@kerooke) April 3, 2019
Segregated Witness (SegWit)
For the first time, daily median transactions per block excluding coinbase transaction for SegWit-based transactions reached over 1,000 on March 30, 2019. Activated for Bitcoin in August 2017 (on Litecoin in May 2017), the scaling upgrade was meant to help change the way data is stored on the network by making transactions weigh much less to fit in blocks. Proposed as a solution to the scaling problem, SegWit would enable Bitcoin to process a greater throughput without having to change the block size. Its uptake has been slow as some key exchanges are yet to run it on their platforms. According to BitcoinVisuals, the highest SegWit transactions reached at the end of 2017 was 294.
Lightning Network (LN)
It’s been touted as one of the best things happening in the cryptocurrency space today especially since the start of Q1 2019. Lightning Network is an off-chain scaling solution for Bitcoin that uses smart contract functionality of the blockchain to enable instant micropayments across a network of participants. Real time statistics show that LN transactions have now surpassed $5 million in capacity. Its use is expected to improve Bitcoin adoption including for merchants who seek to accept the crypto as a means of payment. As at 2017, LN was not available in the space. Hence, with a decentralized 8,000 nodes, the burden of high transaction fees as it was in 2017 would be to ensure effective fees.
From applications for a Bitcoin exchange traded fund (ETF) to traditional investment companies, institutional interest in the ecosystem has risen since 2017. Major companies like Fidelity, Bakkt and even Facebook have expressed plans to venture into the crypto space later this year. Their entry – coming as next year’s Bitcoin block reward halving draws closer – is expected to boost the state of the crypto market while helping to attract more mainstream investors.
Bitcoin uptake shifting from China to South America
Unlike in 2017 when the shot seems to be called from China, difficult economic situations in some South American countries today are forcing people in the region to develop a penchant for transacting cryptocurrencies like Bitcoin. Crypto adoption in these countries has been taken off even as ease of access has increased.
The increasing awareness along with the necessity brought upon them despite less enhanced infrastructure for internet use is bringing substantial growth. South American countries like Venezuela, Colombia, Peru, Argentina and Mexico have been growing organically in their use of Bitcoin.
The People’s Bank of China worked to bring down bitcoin trading below 1% of global level through various measures including placing a ban on direct trading. Hence, the wider Chinese involvement in Bitcoin has reduced drastically though mining is still a core advantage.